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India’s ‘buy now pay later’ companies will move up the e-commerce value chain | Q&A with Udayan Goyal of Apis Partners


Digital financial services are gaining steam, and innovations are taking place in the sector on the back of rising demand in developing markets. But these regions vary in demographics, cultural nuances, and existing infrastructure such as internet connectivity and government policies, which means new developments need to be adapted to fit users in each location.

London-headquartered global private equity firm Apis Partners invests in financial services companies, particularly in India, Southeast Asia, and African countries. The firm was founded by Matteo Stefanel and Udayan Goyal in 2014. It manages over USD 1 billion in assets and backs firms that build tech-based financial products for unbanked and underbanked people.

In 2019, Apis raised a little over USD 550 million for its second fund, drawing cash from global banks, insurance companies, and sovereign wealth funds. It makes equity investments in the range of USD 30 million to 50 million in capital-efficient businesses in sectors such as insurance, digital payments, and lending.

In an email interview, Goyal, co-founder and managing partner of Apis, described in detail the landscape of financial markets in India and Africa. “We monitor hundreds of companies in India and build relationships with their management while we figure out the right time to invest in them. There are over ten Indian companies in our active pipeline today,” Goyal told KrASIA.

The following interview has been edited for clarity and brevity.

KrASIA (Kr): When did Apis Partners enter India? What is Apis’ strategy?

Udayan Goyal (UG): Apis has had a presence in India since 2016, following our initial investments in EPS and Star Health Insurance. In 2020, we invested in Hero Fincorp and Cashfree through our second fund. Apart from these, we made two more investments via a separate investment vehicle between 2019 and 2021 in SecureNow and ImpactGuru.

Our approach has always been to provide growth-stage capital and leverage our expertise to enable our portfolio companies to unleash the potential of underserved communities and ultimately support financial inclusion. Our strategy for the Indian market is consistent with this approach, albeit tailored towards the country’s specific characteristics.

Kr: How do you identify deals in India?

UG: Our approach is to invest our funds over a five-year period. Currently, we are exploring VC opportunities in pretty much every sub-sector of financial services. We steer away from asset-heavy services. Hence, we won’t get into a big traditional bank or a large insurance company. We are trying to find institutions that have capital efficiency. Cashfree, a digital payments company that has grown incredibly well in the last five years, is one example.

Kr: What are your key focus areas within India’s financial services?

UG: Within the financial services market, we focus on payments. We have also worked with companies in the credit sector. We invested in Hero Fincorp because they started as an NBFC. Our investment in EPS, which deploys and manages ATMs, falls under the financial infrastructure segment. We really like insurance too.


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Kr: How do you see the fintech market evolving in the coming years as India prepares for the new umbrella entity (NUE), a for-profit digital payment platform, to end the monopoly of the National Payment Corporation of India (NPCI)?

UG: I think it’s an interesting opportunity, and we are participating in an NUE consortium through EPS. With digital payment volumes of UPI [Unified Payments Interface] growing exponentially, the new umbrella entity makes a lot of sense. If you look at any market in the world, the greatest efficiencies are normally produced through competition between private companies. Now, with some companies in certain markets, we are seeing state-owned companies do well. But that’s not the norm. It’s typically private companies that compete with each other and create efficiencies. I think India has done a phenomenal job with the hybrid situation. NPCI and Aadhar [digital identification for Indians] have proliferated the space in an efficient manner. India has built a baseline infrastructure, and now it’s time to bring in private industries and competition to further improve the framework.

Kr: What are the specific trends that you are keeping an eye on within fintech?

UG: Life insurance is still nascent in India, but COVID-19 has made people realize the need for it. There are a lot of opportunities in life insurance, and connected to that are long-term savings and asset management. So that’s an area we are keeping an eye on. We have made a small investment in an Indian insurance company called SecureNow.

Kr: How do you see “buy now pay later” evolving in India in terms of user uptake?

UG: COVID-19 has supercharged e-commerce penetration, offering a powerful tailwind for “buy now pay later,” or BNPL, as consumers and merchants look for alternative payment options beyond credit cards. BNPL has been widely successful in Europe, Australia, and Latin America for several years and is now picking up steam in markets with real-time payments capabilities such as India, where it acts as a substitute for credit cards and other personal or consumption loans. Our portfolio company Pine Labs has seen 60–70% greater demand compared to January 2020, while ZestMoney has seen demand reaching 140% of pre-pandemic levels. We expect many players to launch this product in India over the next few quarters.

Millennials and Gen-Z, who have mixed attitudes towards credit cards and value the greater sense of control over their unsecured personal borrowing, will drive value for BNPL. Customers have also been attracted to BNPL players that offer a seamless digital experience, which includes automated underwriting models to deliver real-time loan approvals for users who may not otherwise qualify for traditional lending products.

Medium-term, smaller ticket items and baby boomers will offer new avenues for continued growth, particularly as increased marketing initiatives drive further consumer awareness of BNPL’s value proposition. As the market matures, we expect India’s BNPL players to move up the e-commerce value chain, resulting in a blurring of lines between pure-play BNPL players and more conventional e-commerce players.

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Read more: How Walmart-owned PhonePe beat Google Pay and became the first app to cross 1 billion UPI transactions

Kr: How has technology changed financial services in Africa?

UG: Africa is a dynamic market that is underpenetrated, fragmented, and characterized by exponential growth potential underscored by compelling market dynamics, such as a rising number of internet users, favorable regulatory landscape, and huge TAM (total addressable market). With a vast, young, and tech-literate population, we believe Africa is ideally positioned to leverage digital financial services to capitalize on these favorable demographic tailwinds.

However, despite the impressive progress that has been made over the last ten years, around 400 million people remain excluded from the financial system across the African continent. This represents a huge opportunity for innovative financial service providers.

Kr: What are some of the interesting fintech trends in the African market?

UG: Over the years, we have come across novel fintech trends in Africa that have often developed organically to cater to local requirements and don’t exist elsewhere. From last-mile agent networks offering payment acceptance and digital distribution solutions to mobile money and online remittance services, the continent has an abundance of innovative business models in the financial services space.

New payment networks are becoming increasingly popular over older networks and methods that were susceptible to failure. Digital payment service providers are aggressively marketing their services through rewards and bonuses. E-commerce portals like Jumia, Takealot, Loot, and BidorBuy allow users to pay using digital payment services. Funding has also started to flow, and startups such as Flutterwave, PayStack, Payfast, Ozow, Interswitch, Paga, and Jambopay, to name a few, have received millions in venture capital.

Mobile banking is another untapped field in Africa since most areas lack bank branch networks. Mobile banking service providers are quickly stepping in to fill this gap. People in more remote areas are using such services to access almost every type of banking-related service straight from their smartphones. Some of the most prominent examples in this space include M-Pesa and Paga.

Kr: Blockchain and cryptocurrencies have also become prominent in Africa. What are some of their use cases?

UG: Young Africans are quickly adopting and using cryptocurrencies. The value of cryptocurrencies being transferred in and out of Africa increased by 55% over the course of last year. In other parts of the world, cryptocurrencies are mostly used by financial traders, however, in Africa, people are also using them for commerce. The local currency in many African countries is seen as weak and unstable. Cryptocurrencies are becoming a favored choice to make transactions for goods and services. The biggest users of cryptocurrencies are individuals and small businesses in Kenya, South Africa, and Nigeria. Some of the popular cryptocurrency exchanges in Africa include Luno and Ice3x.

Blockchain technology is still quite new, and developers are still trying to figure out the diverse range of applications that it can have. Blockchain technology has so far most commonly been used in the cryptocurrency and payments space, although banks are experimenting with blockchain technology for cross-border payments and recording transactions, while neobanks and payment services are using blockchain to help the process of making payments more affordable. Some of the most widely known blockchain startups include Kenya’s BitPesa and Ghana’s Bit Sika.


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